Bill’s By The Number$

Posted by: Vanessa Guadiana | Posted on: June 20th, 2016 | 0 Comments

1. IMPACT ON THE STOCK MARKET – The last time that the Federal Reserve raised interest rates was on 12/16/15.  In the 1st month following the 12/16/15 Fed hike to short-term rates, the S&P 500 fell 9.2% (total return).  In the 6 months following the 12/16/15 Fed hike to short-term rates (to Thursday 6/16/16), the S&P 500 gained +1.4% (total return).  The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation.  It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).
2. ELECTION YEAR 2016 – 16 of the last 18 presidential election years have produced a positive total return for the S&P 500 stock index.  The only “down election years” dating back to 1944 were in 2000 and 2008 (source: BTN Research).
3. IMPACT ON LONGER PAPER – The last time that the Federal Reserve raised interest rates was on 12/16/15.  In the 1st month following the 12/16/15 Fed hike to short-term rates, the yield on the 10-year Treasury note dropped from 2.30% to 2.04%.  In the 6 months following the 12/16/15 Fed hike to short-term rates (to Thursday 6/16/16), the yield on the 10-year note dropped from 2.30% to 1.58% (source: BTN Research).
4. TIME LAG – When the Fed began a rate hike cycle in 1994, there were 46 days between the 1st and the 2nd rate hikes.  For the rate hike cycle that began in 1999, there were 55 days between the 1st and the 2nd rate hikes.  For the rate hike cycle that began in 2004, there were 41 days between the 1st and the 2nd rate hikes.  Today (6/20/16) is the 187th day since the Fed’s 1st rate hike on 12/16/15 (source: Federal Reserve).
5. IS THIS THE NEW NORM? – Over the 25 years from 1991-2015, the average yield on the 10-year Treasury note was 4.7%.  As of the close of trading last Friday 6/17/16, the yield on the 10-year Treasury note was 1.62% (source: Treasury Department).
6. STOCKS AND BONDS – The size of the US bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) was $40.5 trillion as of 3/31/16, +71% larger than the $23.7 trillion US stock market as of the same date (source: Securities Industry and Financial Markets Association, Wilshire).
7. UNCLE SAM SPENDING – During fiscal year 2015, mandatory spending by the US government represented 68% of total outlays, while discretionary spending was 32% of the total.  There is no annual spending cap in place on mandatory spending, while discretionary spending is capped by Congress each year (source: CBO).
8. RETIREES ARE MILLIONAIRES? – The maximum retirement benefit paid by Social Security to an individual retiring in 2016 at the full retirement age of 66 is $2,639 per month.  $3.167 million invested in a pre-tax account earning 1% annually on a tax-deferred basis would generate $31,668 per year or $2,639 per month of taxable income, i.e., income taxes are due upon withdrawal from the pre-tax account (source: Social Security).
9. DON’T TRUST THEM – Only 20% of 1,027 adults surveyed in early June 2016 have “quite a lot” of confidence or “a great deal” of confidence in newspapers and the accuracy of the information they print, the lowest level recorded on a statistic that has been tracked annually for 24 years (source: Gallup).
10. STAYING PUT – 85% of Americans have not moved in the last 12 months (source: Census Bureau).
11. BUSINESS OR PLEASURE? – 79% of airplane trips taken by Americans are for leisure purposes (source: US Travel Association).
12. MANY DON’T HAVE THE OPTION – 58% of American workers have access to an employer sponsored retirement plan, i.e., either a defined benefit pension plan or a  defined contribution plan such as a 401(k) (source: The Pew Charitable Trusts).
13. IT’S WHY YOU HAVE INSURANCE – The average cost of care on an annual basis for someone hospitalized during the year is $25,000, including expenses for the cost of surgery, doctor care, hospital stay, nursing care, drugs and rehabilitation (source: Center for Retirement Research at Boston College).
14. SHOW ME THE MONEY – 64% of 4,000 people surveyed said that if given the choice they would select having “more money” as opposed to having “more time” (source: Social Psychological and Personality Science).
15. INEXACT SCIENCE – During the last 10 years (2006-2015), only 16 ballplayers that were “top 10” picks in Major League Baseball’s First Year Player Draft, i.e., 16 of 100 draft choices over the decade, have been selected to play in professional baseball’s mid-season All-Star Game (source: MLB).

1. – Broker/Dealer Use Only, Reproduction Prohibited without Express Permission –

   Copyright © 2016 Michael A. Higley.  All rights reserved.  Email mick.higley@mahbtn.com for subscription information.